GHL System Bhd (0021) >>> A Hidden Gem

Turnaround after 4 years of losses.

GHL System Bhd. was initially making losses from 2008 to 2011. However, in 2012, it started to turn around with a net profit (NP) of RM4.4m. This was following the emergence of a new group of management/shareholders in end-2010, which led to a progressive implementation of strategy changes such as the divestment of its loss-making China subsidiaries and the acquisition of COD, a software solutions provider for financial institutions in Thailand. This has led further to the group recording NP of RM2m (surging 80% YoY) in its recent 1Q13 results, which is already half of its FY12 full-year earnings. This was on the back of a +42% YoY rise in the revenue with an improved EBITDA margin of 16.2% from 14.2% in 1Q12.

E-payment market is lucrative.

GHLS’ earnings could continue to see further uptrend momentum with its continued penetration into the low usage of credit card/debit card and loyalty porgrammes in Malaysia, Thailand and Philippines. The ratios of credit card transactions-to-population in Thailand, Philippines and Malaysia stood at only 5.8x, 1.1x and 11.2x respectively compared to Singapore’s ratio of 46.3x. This implies ample room for growth for GHLS given its exposure in these countries.

Growth to ride on Government’s programme.

Of noteworthy is that one the 10 EPPs identified under the government’s ETP i.e. EPP 4 (which emphasises on creating an integrated payment ecosystem), could give an edge to GHLS’ Malaysian business. As Malaysia aspires to become a chequeless economy and reduce its dependency on cash transactions to 63%, from currently c.91%, of the transaction frequency in 2020, this will encourage E-payment transactions, which is estimated to jump by 10-fold from 1.2b to 12.0b transactions per annum. This would certainly benefit GHL as the leading epayment solution provider in Malaysia.

Fair value at RM0.46.

We believe the group could achieve our FY13 NP projection of RM7.8m judging from its decent NP of RM2m in 1Q13 and the sustainable revenue growth in its shared and solution services. We value the stock at RM0.46/share @ 7.0x FY14 PER, which is at a 25% discount to the FBM Small Capital Index PER of 9.3x given its relatively small market cap and illiquidity concerns. We believe the stock has good potentials given its relatively cheap valuation and strong earnings prospect. The stock is also trading at an undemanding valuation of 5.0x forward PER now compared to its regional peers’ PER of 15.6x.

Support >>> 0.30 sen / 0.28 sen

Resistance >>> 0.33 sen / 0.35 sen

 

Recommend Buy Target 0.46 sen

A reasonably sound mid to longterm investment for a @30 sen pennystock.

Not recommended for contra tradings.

 

GOOD LUCK

FKLI to test 1720/17 Support soon

Market Previews

Locally, the FBM KLCI shed 0.55 percent to settle at 1728.64. Losses were in correlation with faltering bourses around the globe which were led by the steep sell-off in Chinese shares. Stocks in China extended a bear market decline on concern that tight credit will deepen the nation’s economic slowdown.

Heavyweight losers locally were stocks from the consumer, banking and energy industries, namely UMW Holding, Hong Leong Bank, Maybank, Public Bank, CIMB, Ambank, Sapura Kencana, PETRONAS Gas and Petronas Chemical. Futures were still traded at a premium of circa 2 point above its underlying cash market.

 

Technicals

Futures prices wilted 0.49 percent to close at 1730.50. Trading activities formed an inverted black hammer, which is considered a bottom reversal sign. Moreover, prices settled below its 20 and 50 day moving averages for the second consecutive day, signaling price weakness. Hence, expect technical buying to push prices upwards today to test its 50 day moving average as bottom feeders take advantage of weak prices.

 

Technical indicators:

 MACD= Negative, ADX= Positive

 

 

 

 

Intraday technical support & resistance for 25th June 2013

 

 1st support 1,720-17; 2nd support 1,700

 1st resistance 1,740, 2nd resistance 1,745-50

Recommendations

Traders can attempt a LONG FKLI at Support 1720/17 with a cutloss at 1710

FBM KLCI in danger of closing bullish GE 13 gap

Bursa Malaysia shares slumped in line with regional losses led by China which tumbled 6.3% amid concerns a credit crunch and scaling back of stimulus by the US Federal Reserve will hurt economic growth. The KLCI fell 17.66 points to settle near session lows at 1,738.19, off an early high of 1,756.02, as losers trashed gainers 797 to 121 on active trade totaling 1.67bn shares worth RM2.18bn.

Concerns over faltering economic growth in China due to a credit crunch and foreign fund flows back to the US should continue to adversely impact near-term sentiment. Hence, there could be further downward correction for the index to close the post 13GE gap-up with next support coming in at 1,718, the high prior to 13GE.

 

More significant retracement supports of the 1,597 low (7/2/13) to 1,826 high (6/5/13) are at 1,711 (50%FR) and 1,685 (61.8%FR) matching the 3 May low.

 

Immediate resistance stays at 1,772 (23.6%FR), with next resistance at 1,792, followed by the 1,800 psychological level.

 

HAPPY TRADING

Daily Charting of the FBM KLCI 24 June 2013

HAPPY TRENDING

List of Oversold & Overbought Stocks 24 June 2013

GOOD LUCK

FCPO : Better Export Numbers Expected Today, Prices Sustainable

Fundamental

Palm oil settled slightly higher as estimates of slowed domestic production and higher demand lead to positive price outlook.

Positive undertone in the competing soyoil in Asian trading hours coupled with the significant rise in Indonesian palm oil exports in May, helped strengthened sentiment which continued to hold the market firm. In addition, weaker Malaysian ringgit was seen as another supportive influence.

Meanwhile, investors will look closely on June 1-20 day export estimates out later today. NYMEX crude retreated alongside the external markets as US Federal Reserve signals on reducing bond purchases later this year sparked selling across equity and commodity markets. Additional pressure stemmed from an unexpected build up in US crude inventories according to EIA weekly report, contrasted with earlier API report that showed a decline. US soyoil soared on lower forecast of soybean plantings and yield in both US and Argentina.

Expect palm oil futures to trade higher in anticipation of an encouraging export figures to be released today.


Technicals

Futures gained 4 points to settle at 2472. Prices opened lower tracking overnight weakness in CBOT soyoil and Dalian palm oil. Futures were then traded with a downward bias throughout the morning session within narrow range as investors opted to be cautious.

 

However, futures recovered on speculative buying which lifted prices to revisit 3-month high and towards positive territories into the close. Formation of a larger white candle indicates a stronger buying force in the current uptrend. Expect positive fundamental outlook and technical strength to keep the buying momentum.

 

Referring to the MACD histogram, it is building up in the positive zone. As always, intraday support and resistance levels will be eyed.

Technical indicators:

MACD= Positive, ADX= Positive

Intraday technical support & resistance for 20th June 2013

1st support 2,450; 2nd support 2,435-20

1st resistance 2,480; 2nd resistance 2,500

As such support and resistance can be pegged at 2450 and 2500 respectively.

Strategy

Trade may long with a stop on or below 2450.

FCPO : Optimistic Upside Ahead of Ramadan Month

HOURLY CHART CONTINUES MID-MAY REBOUND

ITS REPORT — Malaysian palm ITS REPORT — Malaysian palm oil product export for June 1-15 up 18% to 709,860 metric tons from 599,300 metric tons shipped during May 1-15 oil product export for June 1-15 up 18% to 709,860 metric tons from 599,300 metric tons shipped during May 1-15 

GOOD LUCK

Daily Money Flow of FBMKLCI Top 30 Stocks 11062013

 

Daily Money Flow (DMF) Formulation

If previous change (A) + current change (B) > 0, then DMF = “IN”; AND if (A) + (B) < 0, then DMF = “OUT”.

Money Flow (MF) Calculation
The value of money flow is set to zero at the start of the trading day. When a trade is performed, its price is compared to the price of the previous trade (the first trade of the day is compared to the previous day's close). If the prices differ, the money associated with the trade (price times number of shares) is added to or subtracted from the money flow. Additions (inflows, buys) are done on upticks; subtractions (outflows, sells) are done on downticks.

Daily Money Flow (DMF) Interpretation

In general, money flow trends confirm price trends. As prices rise, money flows are usually positive. As prices fall, money flows are usually negative. A divergence, however, between money flow and price trend can be a signal of a future price trend change. For example, a

falling stock price with a positive money flow (IN) can indicate a future rally in the price of the stock. Conversely, a rising stock price with a negative money flow (OUT) implies potential

correction in the stock price.

GOOD LUCK

 

富时大马综合指数 11062013

GOOD LUCK

Selected Oversold Overbought Stocks 07 June 2013

For your perusal .............

 GOOD LUCK

Daily Money Flow of the Construction Sector x 30 Stocks 05 June 2013

Daily Money Flow (DMF) Formulation

If previous change (A) + current change (B) > 0, then DMF = “IN”; AND if (A) + (B) < 0, then DMF = “OUT”.

Money Flow (MF) Calculation

The value of money flow is set to zero at the start of the trading day. When a trade is performed, its price is compared to the price of the previous trade (the first trade of the day is compared to the previous day's close). If the prices differ, the money associated with the trade (price times number of shares) is added to or subtracted from the money flow. Additions (inflows, buys) are done on upticks; subtractions (outflows, sells) are done on downticks.

Daily Money Flow (DMF) Interpretation

In general, money flow trends confirm price trends. As prices rise, money flows are usually positive. As prices fall, money flows are usually negative. A divergence, however, between money flow and price trend can be a signal of a future price trend change. For example, a falling stock price with a positive money flow (IN) can indicate a future rally in the price of the stock. Conversely, a rising stock price with a negative money flow (OUT) implies potential correction in the stock price.

GOOD LUCK

FBMKLCI Top 30 Stocks Money Flow Data Compilations 04 June 2013

Daily Money Flow (DMF) Formulation

If previous change (A) + current change (B) > 0, then DMF = “IN”; AND if (A) + (B) < 0, then DMF = “OUT”.

Money Flow (MF) Calculation

The value of money flow is set to zero at the start of the trading day. When a trade is performed, its price is compared to the price of the previous trade (the first trade of the day is compared to the previous day's close). If the prices differ, the money associated with the trade (price times number of shares) is added to or subtracted from the money flow. Additions (inflows, buys) are done on upticks; subtractions (outflows, sells) are done on downticks.

Daily Money Flow (DMF) Interpretation

In general, money flow trends confirm price trends. As prices rise, money flows are usually positive. As prices fall, money flows are usually negative. A divergence, however, between money flow and price trend can be a signal of a future price trend change. For example, a falling stock price with a positive money flow (IN) can indicate a future rally in the price of the stock. Conversely, a rising stock price with a negative money flow (OUT) implies potential

correction in the stock price.

GOOD LUCK